Latest news with #SamouraiWallet
Yahoo
3 days ago
- Business
- Yahoo
Judge Declines to Order DOJ to Review Records in Roman Storm Case
The federal judge overseeing Roman Storm's prosecution declined to order the Department of Justice to review its records for any materials it might have missed that would help the Tornado Cash developer at the end of a 30-minute hearing Friday morning, though she told the government it should not have any disclosure issues. Judge Katherine Polk Failla also ruled that there were no Brady violation concerns with the Department of Justice's conversations with the Financial Crimes Enforcement Network (FinCEN) about whether mixers needed to register as money transmitters — the conversation that prosecutors pursuing Samourai Wallet developers had with FinCEN officials, but not the prosecutors on Storm's case — one of the DOJ representatives said in the phone conference on Friday. If the judge had found that prosecutors had withheld information, it could affect the case moving forward. "I'm not going to require a further review based on the representations made that there's no additional material of this type, and based on my views that I don't believe the material was exculpatory," she said. "There's a difference between 'this is something I'd like to know' and 'this is a Brady violation,'" the judge said, referring to a Supreme Court precedent that requires prosecutors to share any and all information that might help a defendant with the defendant's team. Storm's defense attorneys argued during the hearing that they needed to know when the prosecutors in their case learned about the FinCEN conversation. "They do plan to say they're charging a conspiracy to operate an unlicensed money transmitter," said defense attorney Brian Klein. "My question is who are they supposed to be licensed with? … this is all in the same issue. They've only dropped one subpart … but they're still going to say they're charging an unlicensed money business." Thane Rehn, a prosecutor who worked on the DOJ case against Sam Bankman-Fried, said that his team wouldn't argue that Tornado Cash needed to secure a license. "The word 'license' doesn't apply here and the jury won't be instructed on licensing issues … what we intend to prove at trial is the defendant knew they were transmitting funds derived from criminals," he said. The judge did at multiple points ask the prosecutors if they planned to change any other theories or charges in the weeks leading up to the trial, saying doing so might be unfair to the defense. The trial is supposed to kick off in less than two months.
Yahoo
3 days ago
- Politics
- Yahoo
Samourai Wallet Files to Dismiss DOJ Case, Citing FinCEN Guidance
The co-founders of Bitcoin privacy app Samourai Wallet pushed back against the U.S. government's criminal charges, arguing in a new court filing that the Department of Justice's case should be thrown out because it breaks with years of Treasury Department policy and threatens to criminalize open-source software. Keonne Rodriguez and William Hill, charged with operating an unlicensed money transmitting business and conspiracy to commit money laundering, filed a joint motion asking a federal judge in Manhattan to dismiss the indictment. The pair's lawyers say Samourai Wallet never handled user funds and shouldn't be considered a financial institution or a money transmitter under federal law. At the heart of the dispute is the distinction between custodial services, which take control of customer assets, and non-custodial tools like Samourai, which merely help users obscure blockchain transactions using a method called CoinJoin. According to the motion, Samourai users always retained control of their crypto, and the app simply coordinated privacy-enhancing transactions among them. The developers' defense cited longstanding guidance from the Treasury Department's Financial Crimes Enforcement Network (FinCEN), that anonymizing software providers are not subject to money transmitter rules. 'FinCEN never maintained that it was a money transmitting business that must be licensed. To the contrary, FinCEN consistently advised that companies and software apps that did not 'accept' or 'transmit' funds were not 'money transmitting' businesses,' the filing reads. The defense argues that the Department of Justice's charges mark a sharp and unprecedented break from that interpretation 'in an apparent regulatory power struggle with FinCEN.' To them, the DOJ's conduct is akin to 'charging a shovel manufacturer because it may know murderers use shovels to bury victims' or 'charging a burner phone manufacturer because it may know some customers use the phones to facilitate drug crimes.' In the motion, the lawyers warned that the DOJ's theory could implicate a wide range of developers building privacy tools. Several crypto advocacy groups, including Coin Center and the DeFi Education Fund, have signaled interest in filing amicus briefs in support of the motion, warning that the case could chill innovation and infringe on civil liberties if allowed to proceed. The court is scheduled to hear arguments on July 22.
Yahoo
19-05-2025
- Business
- Yahoo
Roman Storm's Defense Team Wants to Know if DOJ Withheld Evidence
Roman Storm's defense team wants to know if the U.S. Department of Justice is withholding any information that may help the Tornado Cash developer's case. In a letter filed late Friday, defense attorneys said recent disclosures in another, somewhat similar, case raised concerns that prosecutors either misled the judge overseeing the case or otherwise was playing "fast and loose." "The defense recently learned that the government has possessed exculpatory materials since August 2023 that go to the heart of a fundamental issue in this case: whether a noncustodial cryptocurrency mixer is a 'money transmitting business' for purposes of 18 U.S.C. § 1960," the filing said. "The government's failure to produce those materials in the fall of 2023, when Roman Storm was indicted and first appeared in court, constitutes a Brady violation that has materially prejudiced his defense," even after the DOJ said it would drop a portion of its case against team is referencing the DOJ's case against two developers of Samourai Wallet, another crypto mixer. In that case, defense attorneys said earlier this month that prosecutors delayed sharing that two Financial Crimes Enforcement Network (FinCEN) officials told the DOJ that the mixer did not look like a money transmitter. Prosecutors denied the allegations in a court filing, saying their disclosures were timely and that the FinCEN officials' views were not formal guidance. The DOJ said the two cases are only "superficially similar," the defense filing said Friday. "But what the government characterizes as a superficial similarity is, in fact, the core feature that lies at the heart of the conflicting interpretations of FinCEN guidance and the scope of Section 1960: the noncustodial nature of both protocols," the filing said. "That users exercised sole control over their assets was a basis for Mr. Storm's motion to dismiss and to compel discovery of FinCEN materials." The defense is asking Judge Katherine Polk Failla, who's overseeing the case, to order the DOJ to review any materials it may have that could help Storm's case and share the documents referenced in the Samourai case, as well as when Storm's prosecutors learned about those materials.
Yahoo
16-05-2025
- Business
- Yahoo
DOJ Will Still Pursue Roman Storm Case Despite Blanche Memo, Prosecutors Say
The U.S. Department of Justice will drop part of one count of its case against Tornado Cash developer Roman Storm due to a recent policy memo, the agency said Thursday. The DOJ will not go to trial on a charge alleging Storm failed to comply with money transmitter business registration rules, but still plans to go to trial in July over allegations he knowingly transmitted funds tied to crimes, conspired to commit money laundering and conspired to violate sanctions law, the DOJ said in a letter filed to the judge overseeing its case. "The Government writes to update the Court regarding this case, which is scheduled for trial on July 14, 2025," the letter said. "After review of this case, this Office and the Office of the Deputy Attorney General have determined that this prosecution is consistent with the letter and spirit of the April 7, 2025 Memorandum from the Deputy Attorney General." The April 7 memo, authored by Deputy Attorney General Todd Blanche, directed prosecutors not to pursue cases where regulations may be unclear, or did not meet certain criteria, specifically saying the DOJ should end "regulation by prosecution." Prosecutors in another case against the developers of crypto mixer Samourai Wallet have already asked a judge overseeing that case to pause it while they consider the memo. In a statement, Brian Klein of Waymaker LLP told CoinDesk that his firm, which represents Storm, believes "that this case should never have been brought." "Its dismissal would be consistent with the policies of the Trump Administration and the principles outlined by the Department of Justice in its recent cryptocurrency guidance memo," he said. "Roman's prosecution is a threat to the entire crypto industry and the interests of justice will be best served by its swift dismissal. We will not cease to fight for Roman and that result." Klein spoke at CoinDesk's Consensus 2025 conference in Toronto on Wednesday, where he also shared his view that the case should not have been brought. "One of the defenses we've raised, which is recognized in the U.S., is that coding — literally typing out code — you are given free speech protections for coding," he said. "It's just as if you wrote a book or you did some other type of expressive activity."
Yahoo
09-05-2025
- Business
- Yahoo
Samourai Wallet Prosecutors Say Delayed FinCEN Disclosure Wasn't a Brady Violation
Prosecutors in the Samourai Wallet case have denied accusations that they suppressed critical evidence in their criminal case against the crypto mixing service's two co-founders, Keonne Rodriguez and William Lonergan Hill. In a letter to the court filed Friday, prosecutors urged Judge Richard Berman of the Southern District of New York (SDNY) to deny Rodriguez and Hill's recent motion for a hearing to litigate the government's tardy disclosure of a conversation between prosecutors and the Financial Services Enforcement Network (FinCEN). In that conversation, which took place six months before charges were filed, FinCEN officials told prosecutors that Samourai Wallet didn't meet their definition of a money transmitting business and thus didn't need a license to operate. Despite FinCEN's guidance, prosecutors went ahead with their case, charging both Rodriguez and Hill with one count each of conspiracy to commit money laundering and conspiracy to operate an unlicensed money transmitting business. Through Samourai Wallet, prosecutors have alleged that the two men 'intentionally and successfully laundered over $100 million in crime proceeds of all types' and explicitly marketed their services to 'Dark/Gray Market Participants' including hackers and fraudsters. By not telling the defense about their communication with FinCEN until last month, lawyers for Rodriguez and Hill say the government violated due process — a so-called Brady violation, named for the landmark Supreme Court case Brady v. Maryland in 1963, in which the court held that the government must hand over any exculpatory or material evidence (basically, anything suggesting that the defendant isn't actually guilty of the crime they've been charged with) to the defense in a timely manner. However, prosecutors have denied that they've committed any Brady violations in the Samourai Wallet case. In their letter to the judge, they laid out a host of reasons that the timing of their disclosure of the FinCEN conversation was fair play. First, they argued that their conversation with the FinCEN employees represented their 'individual, informal and caveated opinions' on whether Samourai Wallet would have been required to register as a money transmitting business, rather than a formal finding by the regulator itself. 'Courts have repeatedly held that these types of legal opinions — or opinions of any kind — are not Brady material; facts are Brady material,' prosecutors wrote. Prosecutors also said that, even if the material were relevant to the defense's case, they had turned it over to the defense seven months ahead of trial, writing: 'There is no need for court intervention when the defendants have received discovery materials sufficiently in advance of trial to effectively use the information.' In their own letter to the court earlier this week, lawyers for Samourai Wallet said that their clients had been unfairly prejudiced by the government's lack of disclosure, arguing that it could have impacted the magistrate judge's bail decision or the court's ruling on an early motion to dismiss the case entirely. Prosecutors pushed back against this argument, saying that the bulk of the case against Samourai Wallet was not tied to the money transmitting charge and was instead tied to Rodriguez and Hill's alleged money laundering scheme — the more serious of the two charges against them, carrying a hefty 20 year maximum prison sentence. The back-and-forth over the potential Brady violation comes after the defense asked prosecutors to drop their case under the auspices of the so-called Blanche Memo, a recent memo from Deputy Attorney General Todd Blanche, ordering U.S. Department of Justice (DOJ) staff to narrow their crypto enforcement priorities. Under the Blanche memo, prosecutors were ordered to stop pursuing litigation against crypto exchanges or mixing services for the actions of their end users. Following the request, prosecutors met with the defense to consider the request on April 10. Nearly a month later, the government still has not reached a decision either way, which some former SDNY prosecutors have characterized as unusual in conversations with CoinDesk.
